How an American lobbying company Apco Worldwide markets Narendra Modi to the world

Apco muscled out a raft of PR companies, including the now defunct Vaishnavi Communications of controversial lobbyist Niira Radia, to win the contract to promote Vibrant Gujarat

Although the influence powerhouses that line Washington's K Street are just a few miles from the US Capitol building, the most direct path between the two doesn't necessarily involve public transportation. Instead, it's through a door-a Revolving Door that shuffles former federal employees into jobs as lobbyists, consultants and strategists just as the door pulls former hired guns into government careers.

- The Center for Responsive Politics campaign-finance watchdog in the US

In 2006, an American lobby called Apco Worldwide, which doubles in public relations and boasts clients ranging from dictators to global investment banks, stepped into India. Uncharacteristically for one of the most muscular business lobby groups in Washington, it was a quiet entry. So it was not until three years later that Apco's business in India really came into its own.

Apco muscled out a raft of PR companies, including the now defunct Vaishnavi Communications of controversial lobbyist Niira Radia, to win the contract to promote Vibrant Gujarat, the showpiece investment meeting of chief minister Narendra Modi that often sees dizzy pledges to do business and lavishes praise on Modi's administration.

Vibrant Gujarat has evolved into the country's premier investment meet - it is billed the "Indian Davos" - and as Gujarat goes to polls on December 13 and 17, Modi has frequently used the massive publicity around the event as a plank in his campaign.

Until Apco appeared on the scene in 2009 to sell the event, Vibrant Gujarat was a modest show. At the first three events, investment promises were worth no more than $14 billion, $20 billion and $152 billion.

Enter Apco and in 2009 and 2011, the promises grew to $253 billion and $450 billion. The 2013 edition - from January 11-13 - is billed as the biggest yet. The United States-India Business Council (USIBC), along with counterparts from the UK and Australia, is sponsoring the event.

LOBBY GIANT

Those following Apco's fortunes wouldn't be surprised by the success of Vibrant Gujarat (the company has won a Global SABRE Award for its work). From its headquarters in Washington, Apco has long influenced many hot-button political and economic debates that roiled the US.

In 2010, Apco offered to start an image-improvement campaign for the US financial industry, which includes JPMorgan Chase & Co and Citigroup Inc, after more than a year of public flogging in Washington. When these companies solicited proposals from public relations firms, they said: "Past experience in successful reputation enhancement campaigns is valued."

Apco was hired by Kazakhstan president Nursultan Nazarbayev to extricate himself from a four-year-long dispute with his former son-in-law Rakhat Aliyev. The company was approached by Hewlett-Packard Co's board after accusations of harassment against its chief executive officer. It also handled crises as diverse as Merck & Co's scandal involving Vioxx, the arthritis drug that killed thousands before it was withdrawn, and Ford Motor's troubles with Firestone tires on its Explorer vehicles.

GUJARAT CONNECTION

All these clients have helped Apco fill its coffers: today, it takes home $110 million as income, up from $60 million in 2010. Paul Holmes, editor-in-chief of the Holmes Report, says he ranks Apco as one of the two or three largest and best-known public affairs (lobbying) firms in the United States. Apco has 32 offices, including in Mumbai and Delhi, and employs 600 people worldwide.

For a company not averse to serving controversial clients on controversial issues - supporting unpopular reforms or opposing popular regulations - and consequently locking horns with their opponents, Apco is coy about its association with Modi. On paper, Apco works for the Industrial Extension Bureau (iNDEXTb), the Gujarat government's nodal agency for investments. But for all purposes, it is identified as the public relations manager of the Gujarat chief minister. Vibrant Gujarat isn't really an iNDEXTb event - it is Modi's grandest show.

Margery Kraus, founder and CEO, Apco Worldwide, says Apco's role is limited to assisting the summit in investment outreach globally. "We help communicate the state's key advantages to the appropriate people and organisations," says Kraus, under whose watch Apco has grown from "a one-woman consultancy to one of the largest independent communication, stakeholder engagement and business strategy firms".

"We do not work for chief minister Modi and we do not speak for him." But is that true? In an article published by The New York Times on February 8, 2011, an Apco executive named Steven King responded on behalf of Modi about the "lingering controversies" in Gujarat, a reference to the riots of 2002 and the aftermath. Journalists of foreign media outlets that ET Magazine spoke to say it is Apco that they approach with requests to interview Modi.

Reporters of one foreign publication, who spoke on the condition that neither they nor the publication be named, told ET Magazine that they had "repeatedly approached Apco with requests for interviewing Modi, and that it finally worked". Persons familiar with Apco's affairs say the company "doesn't want to take credit for arranging interviews". They asked not to be named.

The Gujarat government apart, Apco serves companies such as Dow Corning, Walt Disney, Mastercard, Cairn, Welspun and Facebook in India. It is "focusing its energies around six key industries", including energy and retail, says its brochure.

OPEN DOORS

The key to Apco's success in lobbying and public relations is the effort of its 80-member International Advisory Council (IAC), bristling with politicians and bureaucrats such as former Indian diplomat, Lalit Mansingh, and former US ambassador to India, Tim Roemer (see Lobbying Powerhouse).

Apco is hardly a pioneer here. According to the Center for Responsive Politics (CPR), when American voters discard elected officials, lobbying firms snap them up: "Lobbying firms - which often charge steep fees from their deep-pocketed clients - can offer former government employees salaries far greater than those proffered by Uncle Sam. In return, firms get lobbyists who already have established connections in the federal government and whose resumes can act as a powerful draw for potential clients."

In Apco's case, four out of seven lobbyists held government jobs, according to CPR. These in-house lobbyists and strategists have built a formidable network during their previous jobs and current endeavours. For example, Mansingh, who joined the Indian Foreign Service in 1963, also advises Indian lobby group Ficci. Georges Ugeux, a former New York Stock Exchange boss, counsels Ratan Tata.

Another person familiar with Apco's operations revealed that if the Gujarat government has to approach Israel to sell Vibrant Gujarat, Apco provides the access: "That's where people like Roemer or Mansingh come in. They open doors."

Mansingh says IAC members add value to clients' strategies by helping them understand the decision-making process as well as national economic and development priorities. According to Roemer, Apco's international policy experts provide strategic advice to clients on global issues such as the US rebalance to Asia, the future of food security and the challenges to meet the demand for energy.

IAC members, says Kraus, are individuals who understand the complex issues clients face because they have encountered them - and conquered them - in their own careers.

In 2007, Ken Silverstein, the Washington editor of Harper's magazine, posed as a London-based executive with a fictional company and claimed to represent the government of Turkmenistan. Armed with fake business cards, a cellphone number and a bogus website, he approached two lobbying firms to pitch a deal to represent Turkmenistan. It was classic undercover journalism and both firms fell for the bait. One was Apco.

Apco laid out an elaborate communications plan, according to Harper's, promising to lobby policymakers and generate news articles, including positive op-ed pieces by experts - for $40,000 a month.

STING OPERATION

When it finally dawned that it had been duped, Apco complained to Harper's, calling Silverstein unethical. Silverstein's response was: "If you want to weigh my ethics in making up a firm against the ethics of agreeing to represent and whitewash the record of a Stalinist dictatorship, I'm pretty comfortable with that comparison."

He was referring to Apco's services for the Sani Abacha dictatorship in Nigeria as it was preparing the execution of nine pro-democracy activists in the mid-1990s and its work for "corrupt Caspian regimes" such as Kazakhstan and Azerbaijan.

Filmmaker Michael Moore, whose documentary Sicko compared the highly profitable American health care industry with other nations', wrote that when those companies wanted to come after him, they went straight to Apco.

Quoting whistleblower Wendell Potter, a former executive at CIGNA, one of the biggest American health insurers, Moore claimed that Apco ran its "standard playbook", setting up a front called Health Care America that tried to prevent Sicko from evolving into a populist movement.

CONTROVERSIAL CLIENTS

Apco is also said to have deep ties with Israel, possibly because parent company Arnold & Porter, one of Washington's largest law firms, represented several Israeli officials in US courts and due to the presence of Itamar Rabinovich, a former Israeli ambassador, on the IAC.

It appears that Apco, the PR company, catches the bricks hurled at clients, but Apco, the lobbyist, couldn't duck some that came its way.

But Holmes says he suspects that the closeness between Apco and Israel is overstated: "I know the firm has an office in Israel, but it also has a network in the Middle East. And it is worth noting that the firm has worked for the Malaysian government."

When ET Magazine asked Kraus about these allegations, her response was: "Many of these reports are exaggerated or not factual." About the company's lobbying talent, she says, "As a consulting firm, clients hire us based on our consultants' knowledge of a given sector or issue."

Kraus also pointed out that Apco does not relentlessly pick controversial clients. The company, she says, has volunteered to help NGOs and supported causes, including preventing violence against women.

As its resume shows, Apco has never suffered from a deficit of clients. Lobbying is legal in the US and a booming one at that. Companies and their lobbyists must inform the US Senate about their activities, but the Supreme Court's decision to uphold limitless political donations from companies allows interest groups, businesses and trade associations to push their cases with abandon.

Holmes says in the US, the right of individuals and organisations to seek to influence the laws is viewed as fundamental to democracy: "The American view would be that if citizens - or groups of citizens - cannot influence policy, there is no democracy."

He says the lobbying industry represents a wide range of clients - NGOs, labour unions, corporations, governments - and most are controversial by definition. "If there was no controversy, there would be no debate; if there was no debate, there would be no need for lobbying."

As for the success of lobbyists, Holmes says seeking to influence policy needs the best advice available: "A company wouldn't go to court without a lawyer; it shouldn't go to Washington without professional advice."

The advice would range from devising strategies to derail government restrictions to helping them wriggle out of unpleasant situations, as Apco has done many times.

Holmes says there are two approaches to lobbying. "The first involves working closely with individual politicians (or, more often, their staff) to exert direct influence on policy, but typically focuses on letting politicians know what legislation might mean for the industry involved."

WAR STORIES

Many Indian lobbyists specialise in this aspect of lobbying, according to a former associate of Radia, the lobbyist. "The idea is to approach ministers or a parliamentary panel with information," he says. "On many occasions, a politician is misinformed. The trick is to showcase the advantages for himself and his constituency. If lobbyists are unable to convince a lawmaker, at least they can plant seeds of doubts in the mind."

Lobby groups could also delay or even derail a legislation by convincing a politician to raise questions in the parliament. Such groups are also handy for attacking the government without fear of retribution against an individual company. That explains why Indian industry is bursting with lobby groups such as CII, Ficci, Assocham and COAI.

Rajan Mathews, director-general of COAI, which represents most of India's largest telecom operators, says his association only helps members present a common stance before government agencies such as Trai and DoT. "We move the industry into one page."

According to Holmes, the second approach to lobbying, and the one for which Apco is probably best known, involves seeking to influence the politicians indirectly by mobilising public opinion. "Most often, this involves a focus on building alliances among different groups. If a company believes that legislation will mean job losses, it might create an alliance that also includes labour unions. The idea, obviously, is to persuade politicians that the legislation they are looking at is unpopular, that supporting it might cost them votes."

The results are often spectacular. The top eight companies that spent the most on lobbying in the US from 2007 to 2009 all saw their reported tax rates decrease from 2007 to 2010, according to an analysis by the Sunlight Foundation. It shouldn't surprise that Google spent a record $5.03 million on lobbying from January through March of this year.

Not all companies have the patience for lobbying. Earlier this week, British company Rolls-Royce made public its concerns about bribery involving its overseas offshoots. Wal-Mart, the world's largest retailer, which has long lobbied for entering India, is probing bribery allegations in India. In the Indian context, there is no better example of corruption than the award of telecom licences in 2008.

Nor are all countries as tolerant of lobbying by the rich. In Germany, as a recent NYT article explained, money in politics is always seen as trying to buy access.

In India, like elsewhere, PR is identified with promotions or disruptions - toadying up to journalists to prevent a negative story. Public affairs are more lucrative simply because the results are more valuable for clients. Apco has so far been content playing a business strategist and promotional manager in India.

PR, STRATEGY

"For lobbying, you need at least five MPs," says the first person who has his ears close to Apco's operations. "Apco doesn't have the muscle or network for that in India."

Kraus herself says there is no comparison with CII or Nasscom. "Our experience and work in India reflect a broad mix of client needs and the excitement that businesses feel about the Indian market."

But in its 28-year history, Apco has demonstrated repeatedly that it is capable of adjusting to market needs. The company has expanded beyond its public affairs base into an intersection of business, government and media, according to the Holmes Report.

Narendra Modi is no slouch in publicity. During the nearly 10-year reign, he has raised a formidable self-promotional network that spans every spectrum of the media.

But by hard-selling Vibrant Gujarat, Apco is doing him a big service (it is said to charge nearly $25,000 a month as wages). Modi believes a large international audience, members who no doubt carry weight in policy matters back home, helps to burnish his credibility and image, given the cloud over the 2002 riots. But erasing the scars of 2002 is far from easy. Earlier this week, 25 US lawmakers urged the administration to continue to deny Modi entry. Yet, Modi would see great value in an organisation that has a great record in gathering important talking heads.

The support of trade groups from the US, the UK and Australia should be seen in this context. More importantly, acceptance from foreign governments that has long eluded Modi is finally coming. The US said he can apply for a visa while Britain is ending a 10-year boycott.

For the Gujarat chief minister, who is said to be gunning for the prime minister's job, it all seems to be coming together.

But Apco is happy to take a bow for only the success of Vibrant Gujarat.